Tuesday, January 27, 2009

Tuesday budget day notes

...as a whole, most of the announcements and leaks thus far – $2-billion for social housing, $160-million for arts and culture, $550-million for farmers, $300-million for tourism, $250-million for a new economic development agency in Ontario, and so on – seem scattershot.

...

The danger, not surprisingly for a government that is fighting for its political life, is that its spending package will attempt to satisfy every possible constituency, industry and interest group by throwing money at it.

2. John Ivison makes a similar point, but puts a more cynical bent on it:

The focus of this budget is not on setting Canada on the road to recovery. Rather, the principal goal appears to be ensuring a Conservative victory at the next election.

If the Bloc Québécois votes against the budget and we are forced to go to the polls again, the Conservatives will be able to champion the $160-million in new spending on cultural projects that Heritage Minister, James Moore, revealed exclusively to La Presse over the weekend. If the Liberals and NDP vote against the government, the Tories will point out that they are denying the most vulnerable Canadians $2-billion in spending on new public housing.

We are even going to see a new $250-million economic development agency for southern Ontario from the Prime Minister who campaigned for the elimination all corporate subsidies and industrial development schemes in the 2004 election.

...The Globe and Mail has learned that Finance Minister Jim Flaherty plans modest but permanent tax breaks for people in middle- and lower-income tax brackets, with one senior official saying the cuts will apply to those earning $80,000 a year or less. Money will also be provided for home renovations, although it's unclear how much the program will be worth.

Mr. Flaherty will also move to give Ottawa power to regulate credit cards, allowing the federal government to intervene if necessary, sources said.

Broad-based tax cuts, however, are risky for the Conservative minority government, which is under threat of defeat from the opposition parties. The Liberals, who hold the key to the government's survival, have said they will try to vote down the government if the budget slashes income taxes. The Liberals argue that tax cuts are ineffective as an economic stimulus tool and could saddle Ottawa with perpetual budget shortfalls.

...

...observers question whether the Liberals would want to go into an election opposing an income tax break for the middle class.

If we were to have an election, that is. The tax cuts could be the problem area that provoke some real debate in the coming days.

6. Since it's all economic type news today, reader MM offers this Canadian, ahem, start- up as "...measurably successful and a wonderful model" and an example when "very few Canadian companies succeed in commericalising research, design and engineering - especially after investing a tiny amount of capital." Quite the story.